Analysts

Producers and analysts sent up red flags last week at GasMart/Power 2001 in Tampa, FL, about future gas supply potential north of the border. Currently known resources appear to be inadequate and at the current rate of production would be depleted in little more than a decade, they said. Furthermore, the common belief that new sources of supply will be adequate to replace rapidly depleting reserves may be mistaken, the experts said.

Producers and analysts sent up red flags yesterday at GasMart/Power 2001 in Tampa, FL, about future gas supply potential north of the border. Currently known resources appear to be inadequate and at the current rate of production would be depleted in little more than a decade. Furthermore, the common belief that new sources of supply will be adequate to replace rapidly depleting reserves may be mistaken, the experts said.

First quarter profits for Tucson-based UniSource Energy Corp. are expected to come in well ahead of analysts’ estimates because of strong retail and wholesale sales by subsidiary Tucson Electric Power Co. TEP’s retail and wholesale sales rose 3% in January and 8% in February over a year ago. The company expects earnings to be between 50 cents and 60 cents a share for the first quarter, up from First Call/Thomson Financial estimates of 23 cents per share. In the first two months of 2000, retail sales were 1.14 million MWh and wholesale sales were 945,000 MWh. TEP revenues also increased, in particular wholesale revenues. Higher regional wholesale revenue contributed more than 50% of TEP’s operating revenues for the first two months of this year, compared with 24% of operating revenues for the same period of 2000. UniSource plans to release its earnings the week of April 23. Along with its earnings announcement, the company also plans to provide revised earnings guidance for the remainder of 2001. Previously, UniSource said earnings for 2001 would be at least $1.45 per share.

While various market participants and analysts are advising astepped up construction schedule for new power plants, oneCalifornia community may be getting the message.

Buoyed by gains achieved in the overnight Access tradingsession, natural gas futures finished on a positive note Friday, asshort covering took back a small percentage of last week’s massivelosses. The February contract led the way, rumbling 32.3 centshigher to close at $7.459. Meanwhile, the out months were muchquieter with smaller gains in March, April and May almost offsetby modest losses in the rest of the strip.

The gas price projections of the ever-bullish analysts atRaymond James and Associates’ are going up in $1.25 incrementsthese days. The company boosted its Henry Hub price forecast to$5.75/Mcf for 2001 from $4.50 in reaction to what it called a”looming crisis” in the gas market. The increase puts RaymondJames’ forecast a whopping $1.62/Mcf more than the Wall Streetconsensus, according to First Call, but still about a quarter shyof the 12-month futures strip.

Now that most of the production data for the third quarter isin, analysts generally are saying they “told you so” because U.S.gas production is barely making desperately needed gains.Production is, however, growing slightly more than expected, andsome observers see huge gains to be made next year.

Now that most of the production data for the third quarter isin, analysts generally are saying they “told you so” because U.S.gas production is barely making desperately needed gains.Production is, however, growing slightly more than expected andsome observers see huge production gains to be made next year.

Apache Corp.’s third quarter results surpassed analysts’ profittarget by 11 cents mainly because of increases in gas and oilprices. Apache’s U.S. gas production grew 15% to 572 MMcf/d.. Thecompany’s earnings were $201.3 million, or $1.61 per share, morethan double the year-earlier profit of $67.8 million, or 59 centsper share. Revenues rose 83% to $624.6 million. Apache’s averagerealized price for oil was up 42% to $29.11/bbl and its U.S.natural gas prices were up 64% to $4.22/Mcf. During the quarter,the company completed acquisitions of producing properties in SouthTexas and the Permian Basin from Collins and Ware and in the Gulfof Mexico from Occidental Petroleum. On Oct. 9, Apache said itplanned to buy the Canadian assets of New Zealand’s FletcherChallenge Energy in a joint bid with Royal Dutch/Shell Group, whichplans to acquire the rest of the company. Regulators have blockedthe deal, but Shell and Apache hope to win approval for an amendedbid. Apache said the Fletcher deal would bring its oil and gasproperty acquisitions to about $1.5 billion this year.